Michigan lawmakers are moving closer to reshaping how medical debt is reported and collected in the state. Yesterday, the Michigan Senate passed a bipartisan package of bills aimed at reducing the financial burden of medical debt on residents. The legislation would keep medical debt off consumer credit reports, cap interest and late fees, and limit certain collection actions.
The legislation passed the Senate with broad bipartisan support and now heads to the Michigan House for consideration before potentially reaching the governor’s desk. Lawmakers say the effort is designed to address the growing number of residents struggling with medical debt while introducing new guardrails around how healthcare providers and collectors recover unpaid balances.
Key provisions affecting medical debt collection
The bill package includes several measures that directly impact hospitals, medical creditors, and debt collectors:
Credit reporting restrictions
One of the most significant proposals would prohibit consumer reporting agencies from including medical debt in consumer reports in most situations. The legislation also bars medical creditors and medical debt collectors from reporting medical debt to consumer reporting agencies.
Collection agencies would also be required to include a disclosure in initial communications explaining that Michigan law generally prohibits the reporting of medical debt to credit bureaus.
Limits on interest and late fees
The package would place new caps on interest and charges related to medical debt:
- Interest and late fees could not be assessed until at least 90 days after the final invoice due date
- Interest would be capped at 3% annually on medical debt balances
- Hospitals and medical debt buyers would be restricted from charging higher rates on those accounts
Restrictions on collection actions
The proposed “Medical Debt Protection Act” would also restrict certain aggressive collection practices. Under the legislation, medical creditors and collectors would be prohibited from using actions such as:
- Arrest warrants
- Property foreclosures
- Property liens
- Wage garnishment for patients who qualify for financial assistance
The legislation also requires a waiting period before extraordinary collection actions can begin and mandates advance notice to patients.
Another part of the package focuses on financial assistance programs offered by hospitals.
Under the proposed Hospital Financial Assistance Act, hospitals would be required to create and implement financial assistance programs for patients by January 1, 2027.
Eligibility would be based largely on income levels tied to federal poverty guidelines. Uninsured patients earning at or below 350% of the federal poverty level could qualify for discounts of up to 100% depending on the sliding scale established by the program.
Hospitals would also be required to publish clear information about these programs on bills, statements, and websites, and submit annual reports detailing assistance provided to patients.
Read the bills and track them here, here, here, here, and here
